EU's divisive WTO tactic draws fire

For years, U.S. cotton farmers have been hearing about the need for an “early harvest” to help them produce maximum yields and high quality fiber from their crops.

But a new use of the term by a European Union official could have U.S. producers' blood boiling when word of the EU trade commissioner's comments begins to circulate through the Cotton Belt.

“Time is not on our side,” Peter Mandelson was quoted as saying in a speech to West African cotton producers in Mali. “Collapsing prices today threaten the future of your industry tomorrow.”

Mandelson called for an “early harvest” of the U.S. cotton program in the current Doha Round of the World Trade Organization negotiations. This would be despite an agreement by WTO members last year to not single out cotton for special treatment in the Round, which is expected to be concluded in 2006.

National Cotton Council officials and the chairman of the Senate Committee on Agriculture, Nutrition and Forestry expressed disappointment at Mandelson's comments, which were released by his office in Brussels.

“The EU trade commissioner's call for cotton's early harvest is divisive and holds the potential to send the Doha Round into a chaotic free-for-all,” said Woods Eastland, the NCC's chairman.

“The widely accepted single undertaking approach avoids country-by-country sensitivities and limits the potential for brinkmanship in negotiations. Any move away from this approach will seriously damage whatever confidence the U.S. cotton industry currently has in the WTO system.”

‘Not held hostage’

Mandelson said Africa's cotton farmers “cannot afford to wait while talks in Geneva move slowly towards a conclusion. You should not be held hostage to the resolution of other issues and problems in the world trade round.”

Claims by African farmers that they were being harmed by the U.S. cotton program were first publicized in a series of articles in the Wall Street Journal and New York Times in August 2002.

Cotton Council leaders said the claims, which it says are untrue, were orchestrated by OxFam, a charity organization based in the United Kingdom that contends that the industrial and agricultural policies of the developed countries are detrimental to the economies of Third World countries.

Attempts by a group of countries led by Brazil to force the WTO to order the United States and the European Union to dismantle their cotton subsidy programs are generally credited with causing the collapse of the Doha Round talks in Cancun, Mexico in September 2003.

Last year, the African countries of Benin, Burkina Faso, Chad and Mali gave up demands that cotton be treated separately from the general negotiations in exchange for a promise that a special panel would be set up within the WTO to monitor the impact of crop subsidies.

“The special sub-committee on cotton that has been set up in Geneva must now deliver results,” said Mandelson, noting that cotton accounts for 30 to 40 percent of the export earnings of the four countries and that 15 million people depend on it for their living.

“The United States, and to a lesser extent the EU and China, provide direct government assistance to their cotton producers,” he said. “The World Bank estimates that these cotton support policies reduce world prices by some 10-15 percent, and that, at present. We are probably witnessing the sharpest drop in these prices since 1985.”

Sharp retort

That last statement drew a sharp retort from the Cotton Council's president and CEO, Mark Lange.

“The EU subsidizes virtually every agricultural sector and annually outspends the United States by a factor of three, yet it does an excellent job of trying to talk like a reformer,” Lange said.

“The EU is attempting to leverage the developing world as it did in Cancun. Before the EU announcement, the latest reports from Geneva indicated that progress was being made in agriculture and that it was possible for there to be significant achievements prior to the Hong Kong meeting. Abandoning the single undertaking approach at this stage could upset further negotiations.”

Lange said the idea of dramatically changing the terms and conditions affecting one agricultural sector while leaving all other crops unchanged is naïve at best and crippling to other commodities at worst.

“Farmers do not operate in a vacuum,” Lange said. “Isolating specific crops can upset the balance in commodity markets and is a short-sighted trade remedy.”

The U.S. cotton program is not the source of economic hardship for farmers in African countries, he said. The fault lies instead with their continued reliance on a monopolistic, para-statal ginning and marketing system.

“This system fails to provide competitive markets for growers, charges inflated prices for inputs and fails to use internationally accepted grading standards and marketing practices. The result is incomes for African cotton farmers that are below reasonable expectations. Further, the EU's failure to join with U.S. farmers in promoting increased consumption of cotton products worldwide has resulted in per capita cotton consumption in Europe well below U.S. levels.”

Need assistance

African farmers, he said, need assistance in improving agronomic practices, establishing a reliable classing system, improving infrastructure and ginning, privatization of marketing and distribution, and assistance building expanded markets in order to improve farm income.

“The U.S. cotton industry, working cooperatively with USDA and U.S. AID, has initiated several development programs designed to assist African farmers in achieving these results,” he said. “The U.S. also has called for a comprehensive, sectoral negotiation to address inequities and unfair trading practices that exist throughout the fiber, textile and apparel complex following conclusion of the Doha round.

Senate Agriculture Committee Chairman Saxby Chambliss issued a statement saying he did not support separate negotiations for cotton in the Doha Round and would urge the U.S. Trade Representative to reject the tactic.

“While the United States will comply with our obligations under the dispute settlement panel and promote real reform in the agriculture sector, I do not support separating cotton from the comprehensive negotiations currently under way,” said Chambliss, R-Ga. “Mr. Mandelson's time and effort could better help developing countries by ensuring negotiators in Geneva reach agreement on a methodology to cut tariffs.

“The World Bank reports market access is crucial for developing countries in the Doha Development Round. Negotiations are at a critical point and dependent on developments in the coming weeks. Mr. Mandelson's comments were not helpful, and I would urge him to focus on the immediate task at hand.”